BILL NUMBER: AB 1811	CHAPTERED  09/07/00

	CHAPTER   311
	FILED WITH SECRETARY OF STATE   SEPTEMBER 7, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 2, 2000
	PASSED THE SENATE   AUGUST 31, 2000
	PASSED THE ASSEMBLY   AUGUST 31, 2000
	AMENDED IN SENATE   AUGUST 18, 2000
	AMENDED IN ASSEMBLY   MAY 30, 2000

INTRODUCED BY   Assembly Member Reyes
   (Coauthors: Assembly Members Keeley and Wiggins)
   (Principal coauthor: Senator Costa)
   (Coauthor: Senator McPherson)

                        FEBRUARY 3, 2000

   An act to amend Section 50199.17 of the Health and Safety Code,
and to amend Sections 17053.14 and 23608.2 of the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1811, Reyes.  Taxation:  credit:  qualified farmworker housing.

   The Personal Income Tax Law and the Bank and Corporation Tax Law
allow a credit against the taxes imposed by those laws in an amount
equal to 50% of the eligible costs of constructing or rehabilitating
farmworker housing.  The credit is allocated pursuant to the
Farmworker Housing Assistance Program by the California Tax Credit
Allocation Committee in an amount not to exceed $500,000 per calendar
year.
   This bill would apply limitations and allocation provisions set
forth in specified provisions of federal law to the amount of the
farmworker housing credit allowed to a taxpayer.  This bill would
make conforming changes to existing authority and exemptions with
respect to the adoption of regulations for the implementation of
these credits.
   This bill would take effect immediately as a tax levy.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 50199.17 of the Health and Safety Code is
amended to read:
   50199.17.  (a) The committee may adopt, amend, or repeal rules and
regulations for the allocation of housing credits pursuant to this
chapter and Sections 12206, 17053.14, 17058, 23608.2, 23608.3, and
23610.5 of the Revenue and Taxation Code without complying with the
procedural requirements of Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
except as described in subdivision (b).
   (b) The committee shall provide a notice of proposed action as
described in Section 11346.5 of the Government Code.  The notice of
proposed action shall be provided to the public at least 21 days
before the close of the public comment period, and the committee
shall schedule at least one public hearing as described in Section
11346.8 of the Government Code before the close of the public comment
period.  The committee shall maintain a rulemaking file as described
in Section 11347.3 of the Government Code.  The final version of the
regulations shall be accompanied by a final statement of reasons as
described in subdivision (a) of Section 11346.9 of the Government
Code.
   (c) These rules and regulations shall be effective immediately
upon adoption by the committee.
   (d) The committee may also adopt, amend, or repeal emergency rules
and regulations pursuant to this chapter and pursuant to Sections
12206, 17053.14, 17058, 23608.2, 23608.3, and 23610.5 of the Revenue
and Taxation Code.  The adoption, amendment, or repeal of these
regulations shall be conclusively presumed to be necessary for the
immediate preservation of the public peace, health, safety, or
general welfare within the meaning or purposes of Section 11346.1 of
the Government Code.
  SEC. 2.  Section 17053.14 of the Revenue and Taxation Code is
amended to read:
   17053.14.  (a) For taxable years beginning on or after January 1,
1997, there shall be allowed as a credit against the "net tax," as
defined in Section 17039, an amount, subject to Section 42(h)(1) of
the Internal Revenue Code, that is otherwise equal to the lesser of
50 percent of the eligible costs, as determined under subdivision
(b), or the amount allocated under paragraph (2) of subdivision (e).

   (b) (1) For purposes of this section, the "eligible costs" shall
be equal to the total finance costs, construction costs, excavation
costs, installation costs, and permit costs paid or incurred to
construct or rehabilitate farmworker housing.  "Eligible costs"
include, but are not limited to, improvements to ensure compliance
with laws governing access for persons with disabilities and costs
related to reducing utility expenses.  Noneligible costs include land
and those costs financed by grants and below-market financing.
   (2) For purposes of paragraph (1), construction or rehabilitation
of the farmworker housing shall have commenced on or after January 1,
1997.
   (3) Notwithstanding any other provision of this part, eligible
costs shall not include any costs paid or incurred prior to January
1, 1997.
   (c) Notwithstanding any other provision of this part, no credit
shall be allowed under this section unless the taxpayer first obtains
a certification from the committee that the amounts described in
subdivision (b) qualify for the credit under this section and the
total amount of the credit allocated to the taxpayer pursuant to the
Farmworker Housing Assistance Program.
   (d) The taxpayer shall do all of the following:
   (1) Apply to the committee for the credit certification.
   (2) Retain a copy of the certification.
   (3)  Make the certification available to the Franchise Tax Board
upon request.
   (e) The committee shall do all of the following:
   (1) Provide forms and instructions for applications for credit
certification, as specified pursuant to the Farmworker Housing
Assistance Program.
   (2) Accept applications and issue a certificate to the taxpayer
that includes a certification as to the eligible costs described in
subdivision (b) that qualify for the credit and the total amount of
the credit to which the taxpayer is entitled for the taxable year.
Credit in excess of the amount necessary to make the project feasible
shall not be allocated. Credits shall be allocated through a minimum
of one competitive funding round per year.
   (3) Obtain the taxpayer's taxpayer identification number, and each
partner's taxpayer identification number in the case of a
partnership, for tax administration purposes.
   (4) Provide an annual listing to the Franchise Tax Board, in the
form and manner agreed upon by the Franchise Tax Board and the
committee, containing the names, taxpayer identification numbers
pursuant to paragraph (3), eligible costs, and total amount of credit
certified to each taxpayer.
   (f) For purposes of this section:
   (1) "Compliance period" means, with respect to any farmworker
housing, the period of 30 consecutive taxable years, beginning with
the taxable year in which the credit is allowable.
   (2) "Construct or rehabilitate" includes reconstruction, but does
not include any costs related to acquisition or refinancing of
property or structures thereon.
   (3) "Farmworker Housing Assistance Program" means Chapter 3.7
(commencing with Section 50199.50) of Part 1 of Division 31 of the
Health and Safety Code.
   (4) "Qualified farmworker housing" means housing located within
this state which satisfies the requirements of the Farmworker Housing
Assistance Program.  The housing may be vacant or occupied.
   (5) "Committee" means the California Tax Credit Allocation
Committee as defined in Section 50199.7 of the Health and Safety
Code.
   (6) "Qualified accountant" means an accountant licensed or
certified in this state who is neither an employee of the taxpayer
nor related to the taxpayer, within the meaning of Section 267 of the
Internal Revenue Code.
   (g) No deduction or other credit shall be allowed under this part
or Part 11 (commencing with Section 23001) to the extent of any
eligible costs, as defined in subdivision (b), that are taken into
account in computing the credit allowed under this section.
   (h) The farmworker housing tax credit shall not be allowed unless
the taxpayer:
   (1) Constructs or rehabilitates the property subject to the
covenants, conditions, and restrictions imposed by this section and
pursuant to the Farmworker Housing Assistance Program, which shall
include, but not necessarily be limited to, a requirement that the
taxpayer obtain, for approval by the committee, a construction cost
audit and certification of eligible costs from a qualified
accountant.
   (2) Subsequent to construction or rehabilitation of the farmworker
housing, owns or operates the farmworker housing pursuant to the
requirements of this section, or ensures the ownership and operation
of the farmworker housing pursuant to the requirements of this
section.
   (i) The requirements of this section shall be set forth in a
written agreement between the committee and the taxpayer.  The
agreement shall include, but not necessarily be limited to, the
requirements set forth in the Farmworker Housing Assistance Program.

   (j) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and succeeding years if necessary, until the
credit has been exhausted.
   (k) (1) In the case of any disqualifying event, as defined in
paragraph (2), there shall be added to the "net tax," as defined in
Section 17039, for the taxable year in which the disqualifying event
occurs, the recapture amount computed under paragraph (3) and the
interest amount computed under paragraph (4).
   (2) For purposes of this subdivision, "disqualifying event" shall
mean:
   (A) The committee determines that the certification provided under
subdivision (e) was obtained by fraud or misrepresentation.
   (B) The taxpayer fails to comply with the requirements of the
Farmworker Housing Assistance Program, or any other requirement
imposed under this section.
   (3) For purposes of this subdivision, "recapture amount" means:
   (A) In the case of any disqualifying event described in
subparagraph (A) of paragraph (2), the entire amount of any credit
previously allowed under this section.
   (B) In the case of any disqualifying event described in
subparagraph (B) of paragraph (2), an amount determined by
multiplying the entire amount of the credit previously allowed under
this section by a fraction, the numerator of which is the number of
years remaining in the compliance period and the denominator of which
is 30.
   (4) For purposes of this subdivision, "interest amount" means:
   (A) In the case of any disqualifying event described in
subparagraph (A) of paragraph (2), the amount of interest computed
using the adjusted annual rate established in Section 19521 from the
due date of the return for each taxable year in which the credit was
claimed to the date of the payment of the additional tax resulting
from the application of this subdivision.
   (B) In the case of any disqualifying event described in
subparagraph (B) of paragraph (2), zero.
   (l) The annual amount of credit granted pursuant to this section
and Sections 23608.2 and 23608.3 shall not exceed five hundred
thousand dollars ($500,000), provided that the aggregate amount of
the credit granted pursuant to this section and Sections 23608.2 and
23608.3 for the 1998 calendar year and thereafter may exceed five
hundred thousand dollars ($500,000) per calendar year by an amount
equal to any unallocated credits under this section and Sections
23608.2 and 23608.3 for the preceding calendar year or years.
  SEC. 3.  Section 23608.2 of the Revenue and Taxation Code is
amended to read:
   23608.2.  (a) For income years beginning on or after January 1,
1997, there shall be allowed as a credit against the "tax," as
defined by Section 23036, an amount, subject to Section 42(h)(1) of
the Internal Revenue Code, that is otherwise equal to the lesser of
50 percent of the eligible costs, as determined under subdivision
(b), or the amount allocated under paragraph (2) of subdivision (e).

   (b) (1) For purposes of this section, the "eligible costs" shall
be equal to the total finance costs, construction costs, excavation
costs, installation costs, and permit costs paid or incurred to
construct or rehabilitate farmworker housing.  "Eligible costs"
include, but are not limited to, improvements to ensure compliance
with laws governing access for persons with disabilities and costs
related to reducing utility expenses.  Noneligible costs include land
and those costs financed by grants and below-market financing.
   (2) For purposes of paragraph (1), construction or rehabilitation
of the farmworker housing shall have commenced on or after January 1,
1997.
   (3) Notwithstanding any provision of this part, eligible costs
shall not include any costs paid or incurred prior to January 1,
1997.
   (c) Notwithstanding any other provision of this part, no credit
shall be allowed under this section unless the taxpayer first obtains
a certification from the committee that the amounts described in
subdivision (b) qualify for the credit under this section and the
total amount of the credit allocated to the taxpayer pursuant to the
Farmworker Housing Assistance Program.
   (d) The taxpayer shall do all of the following:
   (1) Apply to the committee for credit certification.
   (2) Retain a copy of the certification.
   (3) Make the certification available to the Franchise Tax Board
upon request.
   (e) The committee shall do all of the following:
   (1) Provide forms and instructions for applications for credit
certification, as specified pursuant to the Farmworker Housing
Assistance Program.
   (2) Accept applications and issue a certificate to the taxpayer
that includes a certification as to the eligible costs described in
subdivision (b) that qualify for the credit and the total amount of
the credit to which the taxpayer is entitled for the income year.
Credit in excess of the amount necessary to make the project feasible
shall not be allocated.  Credits shall be allocated through a
minimum of one competitive funding round per year.
   (3) Obtain the taxpayer's taxpayer identification number, or each
shareholder's taxpayer identification number in the case of an S
corporation, for tax administration purposes.
   (4) Provide an annual listing to the Franchise Tax Board, in the
form and manner agreed upon by the Franchise Tax Board and the
committee, containing the names, taxpayer identification numbers
pursuant to paragraph (3), eligible costs, and total amount of credit
certified to each taxpayer.
   (f) For purposes of this section:
   (1) "Compliance period" means, with respect to any farmworker
housing, the period of 30 consecutive income years, beginning with
the income year in which the credit is allowable.
   (2) "Construct or rehabilitate" includes reconstruction, but does
not include any costs related to acquisition or refinancing of
property or structures thereon.
   (3) "Farmworker Housing Assistance Program" means Chapter 3.7
(commencing with Section 50199.50) of Part 1 of Division 31 of the
Health and Safety Code.
   (4) "Qualified farmworker housing" means housing located within
this state which satisfies the requirements of the Farmworker Housing
Assistance Program.  The housing may be vacant or occupied, and it
need not be licensed pursuant to the Employee Housing Act at the time
of the initiation of construction or rehabilitation.
   (5) "Committee" means the California Tax Credit Allocation
Committee as defined in Section 50199.7 of the Health and Safety
Code.
   (6) "Qualified accountant" means an accountant licensed or
certified in this state who is neither an employee of the taxpayer,
nor related to the taxpayer within the meaning of Section 267 of the
Internal Revenue Code.
   (g) No deduction or other credit shall be allowed under this part
or Part 10 (commencing with Section 17001) to the extent of any
eligible costs, as defined in subdivision (b), that are taken into
account in computing the credit allowed under this section.
   (h) The farmworker housing tax credit shall not be allowed unless
the taxpayer:
   (1) Constructs or rehabilitates the property subject to the
covenants, conditions, and restrictions imposed by this section and
pursuant to the Farmworker Housing Assistance Program, which shall
include, but not necessarily be limited to, a requirement that the
taxpayer obtain, for approval by the committee, a construction cost
audit and certification of eligible costs from a qualified
accountant.
   (2) Subsequent to construction or rehabilitation of the farmworker
housing, owns or operates the farmworker housing pursuant to the
requirements of this section, or ensures the ownership and operation
of the farmworker housing pursuant to the requirements of this
section.
   (i) The requirements of this section shall be set forth in a
written agreement between the committee and the taxpayer.  The
agreement shall include, but not necessarily be limited to, the
requirements set forth in the Farmworker Housing Assistance Program.

   (j) In the case where the credit allowed by this section exceeds
the "tax," the excess may be carried over to reduce the "tax" in the
following year, and succeeding years if necessary, until the credit
has been exhausted.
   (k) (1) In the case of any disqualifying event, as defined in
paragraph (2), there shall be added to the "tax," as defined in
Section 23036, for the income year in which the disqualifying event
occurs, the recapture amount computed under paragraph (3) and the
interest amount computed under paragraph (4).
   (2) For purposes of this subdivision, "disqualifying event" shall
mean:
   (A) The committee determines that the certification provided under
subdivision (e) was obtained by fraud or misrepresentation.
   (B) The taxpayer fails to comply with the requirements of the
Farmworker Housing Assistance Program, or any other requirement
imposed under this section.
   (3) For purposes of this subdivision, "recapture amount" means:
   (A) In the case of any disqualifying event described in
subparagraph (A) of paragraph (2), the entire amount of any credit
previously allowed under this section.
   (B) In the case of any disqualifying event described in
subparagraph (B) of paragraph (2), an amount determined by
multiplying the entire amount of the credit previously allowed under
this section by a fraction, the numerator of which is the number of
years remaining in the compliance period and the denominator of which
is 30.
   (4) For purposes of this subdivision, "interest amount" means:
   (A) In the case of any disqualifying event described in
subparagraph (A) of paragraph (2), the amount of interest computed
using the adjusted annual rate established in Section 19521 from the
due date of the return for each income year in which the credit was
claimed to the date of payment of the additional tax resulting from
the application of this subdivision.
   (B) In the case of any disqualifying event described in
subparagraph (B) of paragraph (2), zero.
   (l) The annual amount of credit granted pursuant to this section
and Sections 17053.14 and 23608.3 shall not exceed five hundred
thousand dollars ($500,000), provided that the aggregate amount of
the credit granted pursuant to this section and Sections 17053.14 and
23608.3 for the calendar year 1998 and thereafter may exceed five
hundred thousand dollars ($500,000) per calendar year by an amount
equal to any unallocated credits under this section and Sections
17053.14 and 23608.3 for the preceding calendar year or years.
  SEC. 4.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.
